Profiteering watchdog under Goods & Services Tax (GST) regime, National Anti-Profiteering Authority will cease to exist from December 1. All profiteering related matter will be examined by Competition Commission of India. However, experts feel the issue about explanation of profiteering remains unresolved.

In a notification, the Finance Ministry said: “The Central Government, on the recommendations of the Goods and Services Tax Council, empowers the Competition Commission of India established under sub-section (1) of section 7 of the Competition Act, 2002, to examine whether input tax credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him.” The notification shall come into effect from December 01.

NAA is profiteering watchdog and was set up after the introduction of GST, initially for two years, which was extended two times subsequently. In the Lucknow meeting of GST Council last September, it was agreed that the tenure was to be extended till November 30, after which it would wind up with the CCI stepping in to take over its functions.

Pending cases transfer

Section 171 of CGST Act deals with anti-profiteering measure and prescribes any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices. Complaints in this regard can be filed with NAA. Now it will be done with CCI.

Commenting on the latest development, Rajat Mohan, Senior Partner with AMRG says though NAA will cease to exist but Directorate General of Anti-profiteering will retain its investigative powers under GST laws. All reports by DGAP henceforth will be submitted to CCI for its verdict. CCI was formed in 2003 to protect consumers’ interests and ensure free trade, allowing it to adjudicate GST profiteering cases that will undoubtedly improve the quality of orders.

“Transfer of all pending cases from NAA to CCI and forming a special bench for adjudication may take some time before things ease out. Post this transfer, jurisdictional high courts will also consider remanding all the writ petitions filed in profiteering cases to CCI,” he said.

SR Patnaik, Partner & Head-Taxation with Cyril Amarchand Mangaldas says as per this notification, the national anti profiteering authority instead of being constituted specifically under GST would be an authority notified by Government (as per GST council recommendation it would be the CCI) .

“While it is a welcome step to have CCI as the body since it is there for some time and is adequately positioned to handle pricing matters. The fundamental issue of what would constitute “commensurate reduction in price” and various methods employed by company like increasing grammage, practice of zeroing etc. shall continue to remain disputed before various High Court,” he said.